Business

Alibaba's market value up $58 billion in a day

Chinese e-commerce giant's shares jump 13.3% after sales prediction

Alibaba Group's market value swelled by more than US$42 billion ($58 billion) in one day after the Chinese e-commerce giant predicted that sales could grow as much as 49 per cent this year.

The stunning guidance was delivered from the group's Hangzhou headquarters at its annual investor day on Thursday. It smashed consensus estimates for 35 per cent revenue growth and upended the notion that growth gets tougher the larger you get.

Investors swung into a buying frenzy.

Alibaba's shares skyrocketed 13.3 per cent to an all-time high yesterday, and group founder Jack Ma's net worth surged US$2.8 billion overnight.

Mr Ma, 52, is now the richest person in Asia and the 14th wealthiest in the world with a net worth of US$41.8 billion, based on Bloomberg estimates.

At last year's investor day, Alibaba released sales forecasts for the first time, promising 48 per cent revenue growth. It over-delivered.

In the year ending March 31, it reported a revenue of US$23 billion, a jump of 56 per cent from the year before.

If not for the consolidation of Singapore-based Lazada and video site Youku, revenue would have grown 45 per cent.

Analysts attending the investor day were given plenty of grist to go bullish on China's largest e-commerce firm.

The spotlight was shone on its recently launched Brand Databank, a centralised customer data platform that gives brands and merchants feedback on their marketing campaigns and helps them spot trends in consumer behaviour.

ANALYTICS

"The key is analytics. Alibaba platforms - Taobao, Alipay and Cainiao - allow the company to know its users and customers inside out, more than other companies. That is what the sellers are willing to pay for," wrote Maybank Kim Eng analyst Mitchell Kim in a note.

Some 10 million small merchants use Alibaba's platforms every day, and 75 per cent of Forbe's top 100 global brands now have store fronts, he added.

User engagement on the constantly evolving Taobao social commerce app is also rising steadily.

The average user opens the app eight times a day now and placed 89 orders via Taobao in the last fiscal year, Mr Kim said.

But China's e-commerce boom cannot last forever, and Alibaba has voiced its ambitions of becoming a global business.

After last year's acquisition of Lazada, South-east Asia is set to be the next stage on which the Chinese giant clashes with American rival Amazon, which is expected to enter South-east Asia via Singapore this year.

At the end of last month, Amazon made headlines when its shares climbed past the US$1,000 mark. It has a US$483 billion market cap, versus Alibaba's US$360 billion.

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